Measuring ROI for social media efforts
What is ROI and why should you measure it?
ROI or Return On Investment is the measure of the benefit derived from marketing efforts resulting from dedicating resources. ROI should be measured to help to understand the effect of your marketing efforts and justify the commited expense of resources be it money or a team members time.
So how do you go about measuring ROI?
Set Conversion Goals
Setting goals should link a measurable action leading to a monetary outcome down the sales cycle. Examples of these actions are:
- Time spent on a product or service page.
- Database signups.
- Using a contact form.
- An online purchase.
You will need to establish a monetary value to these conversions based on your businesses sales history.
Prioritize the right platforms
Distributing your time and effort across your most effective social network proportionally will have a positive effect on your ROI. Focusing on the following metrics will determine which platform to place the most emphasis on:
- Page or Profile Visits
- Contact via social network
Track your efforts
Tracking what your social media efforts cost you versus what they produce is essential to calculating your ROI.
Keep track of the time spent on social media communications and any paid amplification or advertising. Regularly record your key indicators of reach, impressions, interactions using Facebook Insights and Twitter Analytics and Google Analytics.
Create regular reports with this information to provide the data for calculating ROI.
Once you have collected data for a period of a month or more you can calculate your return on investment for your social efforts.
Simply the formula for ROI is:
(Returns Attributed To Social Efforts Less Cost Of Social Efforts)
Cost Of Social Efforts
Multiplied by 100 to create a %
Obviously you are looking for a positive ROI, however social media can take time to produce results so do maintain your efforts. The key thing is now you have a benchmark from which to measure future ROI against.
As with all marketing efforts it returns to the first step of evaluating your relevant your goals. Revisiting these goals on a regular basis ensures you are tracking the right conversions and focusing on the most effective social platforms for evaluating the effectiveness of your efforts.